Soundings

Heather Mac Donald

BIDing Adieu

Autumn 1998

Is New York City big enough for both a ferociously aggressive mayor and a ferociously aggressive private manager of public space? The Giuliani administration's triumphant campaign to oust Dan Biederman as director of one of the city's most successful business improvement districtsthe Grand Central Partnershipsuggests not. The city's stated reasons for ejecting Biederman are so unpersuasive that they raise the suspicion that the mayor might be souring on the very idea of BIDsa prospect we should fear.

The ironies in Giuliani's clash with Biederman rise almost to an Aristotelian standard of tragedy. Both men have a fervent commitment to a safe and orderly city. During the eighties, Biederman's breathtaking reclamation of crime-infested Bryant Park as head of the Bryant Park BID exemplified the benefits an unrelenting attention to the idea of public order could bringan idea candidate Giuliani would exploit and Mayor Giuliani would successfully practice. Biederman's Bryant Park revolution, using private money and private expertise to save a public space, led to his selection as head of two other business improvement districtsthe Grand Central Partnership and the 34th Street BIDwhere he similarly transformed the urban landscape.

But the very traits that led to Biederman's success helped bring about his downfall. Like Mayor Giuliani, Biederman possesses an untiring will to realize his ideas, and he exploits the maximum power available to him under law to do so. He raised over $50 million in debt for capital improvements in his BIDs; he tried to close off streets outside Grand Central Terminal to create a pedestrian haven; he developed his own social services programs for the homeless (generating a huge amount of bad press); and he entertained offers from other areas within and outside the city to create new BIDs. The city now cites such activities as evidence that Biederman is "out of control," even though the city law chartering BIDs explicitly permits several of them.

Biederman's lofty ambitions might not have landed him in such trouble, if he didn't also have a Giuliani-like conviction of his own infallibility. Biederman has alienated public officials with his refusal to take no for an answer and his obvious contempt for decisions that don't go his way. If one commissioner vetoed a Biederman project, Biederman or his staff would seek a contrary decision from a different officialzealous advocacy, but not behavior to endear Biederman to the original naysayer. Add to the mix his $335,000 combined salary, and you have a recipe for growing resentment from his public-sector overseers.

When the Grand Central Partnership's city contract came up for renewal this summer, the administration demanded Biederman's ouster as a condition for it and launched a series of questionable legal threats and shifting accusations against him. The main charges: Biederman ran three BIDs; his salary was too high; he issued debt; and he had too much power. Consider them one by one.

Biederman ran three BIDs. Biederman's detractors seemed to think that if they repeated this observation often enough, they wouldn't have to show why it's improper to run three BIDs. Suddenly solicitous of the city's corporate taxpayers, administration spokesmen worried that Biederman was not giving each BID its due. Directing three BIDs "poses conflict-of-interest questions," one City Hall official charged. But this is ultimately none of the administration's business; if any of Biederman's boards feels he's shortchanging them, they can fire him. Biederman is their employee, after all, not the mayor's. The city didn't even try to present evidence that his three BIDs weren't maintained at an equal level of care. In fact, the interlocking directorates offer the BIDs valuable economies of scale; to split them up, as the mayor seeks, will disrupt their information systems and impose unnecessary costsundermining the very efficiencies BIDs were formed to achieve.

Biederman's salary was too high. Again, it's none of the city's business. The boards who employ Biederman set his salary: the property owners in each BID pay it, not the city. If the boards think they can get better service at a lower price, they will do so; his real-estate-mogul employers aren't neophytes at the bargaining table.

Biederman issued debt. It's certainly odd to see the Giuliani administration wringing its hands over Biederman's bonds, since the city's chartering law for BIDs anticipates bond offerings. Moreover, the city signed off on each transaction. When Biederman tried to raise an additional $10 million in 1996 to participate in the Grand Central Terminal renovation, the administration objected and Biederman had to drop the matter. If the city has second thoughts about the earlier offerings, it can blame only itself.

Biederman had too much power. This was the most amorphous charge of all. Did the city's assertion rest on the number of BIDs Biederman ran, their aggregate size, or some mathematical relation between these two elements? What if the three BIDs had originally been formed as one very large onewould the city have objected less? In fact, no BID, no matter how big, can so much as put up a bench in public space without city approval. Biederman may have had oversight responsibility for a greater swath of Manhattan than any other BID manager, but his power remained only what the city granted him. If Biederman has been an unusually persistent, even annoying, advocate for his causes, the city has always had the last word.

At heart, the "too much power" argument reflects the city's atavistic fear of private enterprise. Any minute, the city seemed to think, Biederman would don a black hat and start charging for admission to 34th Street or Bryant Park. In 1992, then-state senator Manfred Ohrenstein offered a classic formulation of this view: "You've got one man running a private government for public purposes in the center of Manhattan," he maintained. "It's just too much power with no control, no accountability, no review." The charges were fantastic then and remain so today. Biederman possessed only one attribute of governmenta city-enforced local taxing power. As for lack of "accountability" or "review," Biederman wasand isaccountable to his boards and subject to constant government review.

But Biederman partly shoveled his own grave. He was, according to one mayoral advisor, "tone-deaf to politics," and he failed to notice the fury growing against him early enough. Eventually, everything came down to a battle of wills between him and the mayor. In such a confrontation, the outcome was never in doubt: the mayor stripped midtown of its passionate impresario.

The saga was more than a personality conflict, however; it was another portent that the mayor may be tiring of BIDsor at least, growing keen to assert greater control over them. In 1996, following Biederman's failed attempt to raise additional capital, Mayor Giuliani revoked the BIDs' power to issue bonds. Earlier this year, the administration issued a misguided set of rules requiring BIDs to clear their every activity or purchasing decision with the city, potentially destroying the very nimbleness that makes BIDs so successful. And having dictated who was to be the Grand Central BID's new chairman, the mayor comes dangerously close to turning BIDs into banana republics.

The clash with Biederman was probably unavoidable. After all, BIDs formed before Giuliani's arrival in City Hall as a response to city government's failure to provide basic services like trash collection, street sweeping, and the preservation of public order. They continue to offer a standing reproach to government, even to one as reform-minded as the mayor's. The city has come far under Mayor Giuliani, but by no means can it do without BIDs. If the mayor decides that BIDs are superfluous, he should stroll through my neighborhood, which lacks one. The sidewalks and gutters overflow with greasy fast-food containers and gristly chicken bones, torn plastic bags, and other waste, tossed by pedestrians or dumped on sidewalks by vagrants as they rifle through trash cans. Graffiti covers storefronts and mailboxes. Perhaps the city's sanitation department can't do any better than this. If so, it's nowhere near what an excellent business district needs.

When BIDs reach the sophistication and size of those in the city's most prominent districts, they do createin one limited senseadditional work for City Hall. The landmark BIDs constantly spin out ideas and initiatives that the administration must then oversee and coordinate. But before the city concludes that this is a burden it can do without, it should consider the far greater work BIDs do to save the city, and the enormous surge in private creativity they have let loose. The mayor should welcome such creative ferment and guide it with as light a touch as possible.